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Friday, 5 April 2013

Research Partnership Takes on Islamic Finance

A research partnership has been formed to create case studies for business school programs, spelling out the commercial implications of Islamic finance.

Deloitte’s Islamic Finance Knowledge Centre (IFKC), a think tank based in Bahrain, is partnering with INCEIF, the Global University of Islamic Finance in Malaysia, and the University of Reading’s Henley Business School in England, says IFKC Director Hatim El Tahir.

Islamic finance refers to banking activity that follows the principles of Islamic religious law, or sharia, which prohibits practices that are common in the rest of the world, including charging interest for loans. Instead of a standard mortgage, with the property as collateral, for example, a sharia-compliant bank would take ownership of the property and lease it back to the original owner.

El Tahir says the new research initiative will focus on four key areas: regulation and governance, risk management and internal controls, product strategies and marketing, and talent leadership programs.

The goal, he says, is operational excellence and viable business models for sharia-compliant businesses. Research on pricing strategies, for example, might focus on the challenge of matching prices offered by conventional banks within a sharia-compliant framework. Research on the insurance industry, a further area in which Islamic law requires changes to standard practices, might focus on improving Takaful (Islamic insurance) products and the potential for growth.

With big banks and accounting firms now catering to those seeking sharia-compliant products and services, a number of business schools are incorporating Islamic finance into their programs. Geneva Business School offers a master’s in Islamic Finance, and Bangor Business School in London offers an MBA in Islamic Banking and Finance.

The partnership will create case studies for use in business schools and professional development education. “We wanted to develop cases that we can share with industry stakeholders around the world,” El Tahir says. “Hopefully this will be feeding back into the educational side.(Bloomberg Business Week / 03 April 2013)